Technical Assistance Report

Project Number: 45016-001

Knowledge and Support Technical Assistance (KSTA)
December 2017

India: Capacity Building of the Aid Accounts and

Audit Division of the Ministry of Finance

This document
The views is herein
expressed beingare disclosed
those of the to the public
consultant and do in accordancerepresent
not necessarily with ADB’s Public
those of ADB’s
Communications
members, Board ofPolicy 2011.
Directors, Management, or staff, and may be preliminary in nature.
 CURRENCY EQUIVALENTS
(as of 12 December 2017)

Currency unit – Indian rupee/s (₹)

₹1.00 = $0.015
$1.00 = ₹64.47

ABBREVIATIONS

AAAD – Aid Accounts and Audit Division

ADB – Asian Development Bank
ICS – integrated computerized system
IT – information technology
TA – technical assistance

NOTES
(i) The fiscal year (FY) of the Government of India ends on 31 March. “FY” before a
calendar year denotes the year in which the fiscal year ends, e.g., FY2017 ends
on 31 March 2017.

(ii) In this report, "$" refers to United States dollars.

Vice-President Wencai Zhang, Operations 1

Director General Hun Kim, South Asia Department (SARD)
Director Kenichi Yokoyama, India Resident Mission (INRM), SARD

Team leader Krishnendu Baran Sarkar, Senior Financial Control Officer, SARD
Team member Neeru Sehgal, Financial Control Analyst, SARD

In preparing any country program or strategy, financing any project, or by making any
designation of or reference to a particular territory or geographic area in this document, the
Asian Development Bank does not intend to make any judgments as to the legal or other status
of any territory or area.
 CONTENTS
Page
KNOWLEDGE AND SUPPORT TECHNICAL ASSISTANCE AT A GLANCE
I. INTRODUCTION 1
II. ISSUES 1
III. THE TECHNICAL ASSISTANCE 2
A. Impact and Outcome 2
B. Outputs, Methods, and Activities 2
C. Cost and Financing 3
D. Implementation Arrangements 3
IV. THE PRESIDENT'S DECISION 4

APPENDIXES
1. Design and Monitoring Framework 5
2. Cost Estimates and Financing Plan 8
3. List of Linked Documents 9
 Project Classification Information Status: Complete

KNOWLEDGE AND SUPPORT TECHNICAL ASSISTANCE AT A GLANCE

1. Basic Data Project Number: 45016-001
Project Name Capacity Building of the Aid Accounts Department SARD/INRM
and Audit Division of the Ministry of /Division
Finance
Country India Executing Ministry of Finance (Aid Accounts & Audit
Agency Division)
qq

2. Sector Subsector(s) ADB Financing ($ million)

Information and ICT strategy and policy, and capacity development 0.73
communication
technology
Total 0.73
qq

3. Strategic Agenda Subcomponents Climate Change Information

Inclusive economic Pillar 1: Economic opportunities, Climate Change impact on the Low
growth (IEG) including jobs, created and expanded Project

qq

4. Drivers of Change Components Gender Equity and Mainstreaming

Governance and Institutional development No gender elements (NGE)
capacity development Public financial governance
(GCD)
Knowledge solutions Application and use of new
(KNS) knowledge solutions in key
operational areas
qq

5. Poverty and SDG Targeting Location Impact

Geographic Targeting No Nation-wide High
Household Targeting No
SDG Targeting Yes
SDG Goals SDG17
qq

6. TA Category: B
qq

7. Safeguard Categorization Not Applicable

qq

8. Financing
Modality and Sources Amount ($ million)
ADB 0.73
Knowledge and Support technical assistance: Technical Assistance 0.73
Special Fund
Cofinancing 0.00
None 0.00
Counterpart 0.00
None 0.00
Total 0.73
qq

9. Effective Development Cooperation

Use of country procurement systems No
Use of country public financial management systems Yes
Qq

Source: Asian Development Bank

This document must only be generated in eOps. 21022017144732892011 Generated Date: 08-Jan-2018 12:46:01 PM
 I. INTRODUCTION

1. The knowledge and support technical assistance (TA) will assist the Aid Accounts and
Audit Division (AAAD)—located within the Department of Economic Affairs in the Government of
India’s Ministry of Finance—to strengthen its institutional capacity by streamlining public debt
management and funds flow operations. Streamlined functioning of the AAAD is essential for
better management of development activities and projects. The TA aims to help
(i) re-engineer systems, upgrade information technology (IT) infrastructure, and
automate work processes related to external debt management;
(ii) provide specialized training for AAAD officials;
(iii) provide capacity building and training of various stakeholders for better fund
flows and loan covenant compliance; and
(iv) study the existing fund flow process and identify ways it can be expedited and
improved.

2. The TA is in line with the country partnership strategy of the Asian Development Bank
(ADB), which includes capacity building of counterpart agencies as an important objective.1 A
request from the government for institutional strengthening and capacity building of the AAAD
was received in October 2016, and therefore could not be included in the country operations
business plan, 2017–2019, which was released in October 2016; the TA is included in the 2017
annual work program of ADB’s South Asia Department.

II. ISSUES

3. The infrastructure sector is a key driver of India’s economy. The government has made a
record allocation of ₹3,961,350 million ($59.2 billion) for numerous infrastructure projects in the
FY2018 Union Budget, which is expected to provide a significant boost to the economy. This is
an almost 80% increase from the FY2017 allocation of ₹2,212,460 million ($33.0 billion). To
support the enhanced infrastructure expenditure, the government is undertaking significant
initiatives to develop the required IT platform. Strong IT infrastructure can significantly improve
the efficiency of the government’s internal business processes, while enhancing transparency,
accountability and responsiveness.

4. AAAD’s business processes are computerized, but other stakeholders have already
improved their workflow and business processes, thus requiring upgrading of AAAD’s system to
remove paper-based workflows that necessitate the physical exchange of documents. The
electronic transfer of documents will save time, reduce transaction costs, promote process
efficiencies, reduce errors, and avoid unnecessary processing delays.

5. Increased infrastructure investment in India requires faster workflow and smooth

business processes. AAAD is responsible for maintaining comprehensive accounts of all the
loans and grants obtained by the government from all external (multilateral and bilateral) funding
sources, and is thus a key department requiring an enhanced IT infrastructure.2

1 ADB. 2017. Country Partnership Strategy: India, 2018–2022. Manila.

2 AAAD’s functional activities are described in the Functions and Roles of the Aid Accounts and Audit Division of the
Department of Economic Affairs (Supplementary Document 2, accessible from the list of linked documents in
Appendix 3).
2

6. AAAD helps administer loans and grants until final repayments have been made.
AAAD’s portfolio is increasing each year, and electronic withdrawal applications for
disbursements are accepted from implementing agencies to the extent possible. As of 7
November 2017, AAAD handled over 1,350 projects funded by multilateral and bilateral
agencies. This is expected to increase further in support of India’s growing infrastructure
investments. AAAD relies heavily on IT for its daily operations, but the present systems are
constrained by inadequate IT infrastructure and resources. The Department of Economic Affairs
recognizes that AAAD’s IT functions are in urgent need of upgrading—the present IT system
lacks useful functions, is hard to use, slow, and too inflexible to meet current business needs.
Overall disbursement processing and accounting activities conducted via the existing IT
interface need to be improved.

III. THE TECHNICAL ASSISTANCE

A. Impact and Outcome

7. The TA is aligned with the following impact: government budgetary administration

system digitally and economically strengthened. 3 The TA will have the following outcome:
capacity of AAAD to manage business processes and funds flow for externally aided projects
increased.4

B. Outputs, Methods, and Activities

8. Output 1: Information technology systems for debt management modernized. A

new integrated computerized system (ICS) will be developed specifically for AAAD operations,
including an advanced and upgraded reporting functionality, tracking audit compliance, and
strengthened e-claim submissions. The ICS may support options to draw dual or multiple
currencies within a single loan or grant as considered necessary. An upgraded reporting module
will incorporate both standard and tailor-made reports with download features. The existing
AAAD website will be modified and upgraded to incorporate new requirements and ensure it is
integrated with the ICS. The feasibility of creating interfaces between the upgraded ICS and IT
oriented application systems of other stakeholders will also be reviewed and implemented
where possible. As needed, laptop computers, mobile access devices, network devices and
other IT hardware will be procured under this TA, and will be turned over to the executing
agency.

9. Output 2: Capacity building activities conducted for the Aid Accounts and Audit
Division. Workshops (one each on the updated training manual and the fund flow study findings,
including audit compliance for various government stakeholders) will be conducted. One
international study tour for AAAD officials will be organized to increase understanding of best
practices in debt management.

10. Output 3: The functional workflow document for the Aid Accounts and Audit
Division updated. This document will detail the day-to-day processes—e.g., disbursements,
debt servicing, coordination, and electronic data processing activities—used by AAAD.

3 2015, Government of India, Ministry of Electronics and Information Technology. 2015. Digital India: Power to
Empower Program.
4 The design and monitoring framework is in Appendix 1.
 3

11. Output 4: Study on existing fund flow process prepared. The study report aims to
assess existing procedures and explore potential improvements through modernized IT
interventions that enable taking timely actions.

C. Cost and Financing

12. The TA is estimated to cost $900,000, of which $725,000 will be financed on a grant
basis by ADB’s Technical Assistance Special Fund (TASF-other sources). The key expenditure
items are listed in Appendix 2.

13. The government will provide counterpart support in the form of counterpart staff, office
supplies, secretarial assistance, and other in-kind contributions.5

D. Implementation Arrangements

14. ADB will administer the TA. The India Resident Mission will be responsible for
coordinating, supervising and implementing all TA activities, including recruitment and
monitoring of consultants. The TA will be implemented from December 2017 to December 2020.

15. The implementation arrangements are summarized in the table.

Implementation Arrangements
Aspects Arrangements
Indicative implementation period December 2017–December 2020
Executing agency Ministry of Finance (AAAD)
Implementing agency Ministry of Finance (AAAD)
Consultants To be selected and engaged by ADB
QCBS 10 person-months $92,000
QCBS 115 person-months $466,000
ICS 44 person-months $84,000
Procurement To be procured by ADB
Shopping contracts $10,000
Advance contracting and retroactive Not envisaged
financing
Disbursement The TA resources will be disbursed following ADB's Technical Assistance
Disbursement Handbook (2010, as amended from time to time).
Asset turnover or disposal Intangible items such as software that are intended to be developed and
arrangement upon TA completion goods purchased under the TA will be turned over to the executing agency
upon completion of the TA.
AAAD = Aid Accounts and Audit Division, QCBS = quality and cost-based selection, TA = technical assistance, ICS =
individual consultant selection.
Source: ADB estimates

16. Consulting services. ADB will engage the consultants following ADB’s Procurement
Policy (2017 as amended from time to time) and its associated project administration
instructions and/or staff instructions.6

5 Detailed list of counterpart support (Supplementary Document 1, accessible from the list of linked documents in
Appendix 3).
6 Terms of Reference for Consultants (accessible from the list of linked documents in Appendix 3).
4

17. Social media and websites. The existing website needs to be upgraded by adding
features and integrating the website with the proposed ICS. The website will be maintained by
AAAD after completion of the TA.

IV. THE PRESIDENT'S DECISION

18. The President, acting under the authority delegated by the Board, has approved the
provision of technical assistance not exceeding the equivalent of $725,000 on a grant basis to
the Government of India for Capacity Building of the Aid Accounts and Audit Division of the
Ministry of Finance, and hereby reports this action to the Board.
 Appendix 1 5

DESIGN AND MONITORING FRAMEWORK

Impact the TA is Aligned with

Government budgetary administration system digitally and economically strengtheneda

Performance Indicators
Data Sources and
Results Chain with Targets and Risks
Reporting
Baselines
Outcome
Capacity of AAAD in a. Integrated computerized a–b. Consultant’s TA High turnover of trained
managing business system used at AAAD by report staff to manage the ICS
processes and funds December 2021 and AAAD website.
flow for externally- 2017 Baseline: n.a.
aided projects
b. Time required for funds
increased.
transfer process reduced to
3–4 days by December
2021
2017 Baseline: 6–7 days

Outputs

1. IT systems for debt 1a. ICS established by 1a–1b.Consultant’s TA Delay in TA

management September 2020 report implementation due to
modernized 2017 Baseline: not lack of participation from
established prospective bidders.
1b. AAAD website updated
by September 2020
2017 Baseline: not updated
6 Appendix 1

Performance Indicators
Data Sources and
Results Chain with Targets and Risks
Reporting
Baselines

2a. One international 2a. Training report

2. Capacity building
study tour conducted for
activities for AAAD
AAAD on best practices in
conducted.
debt management by
December 2018
2017 Baseline: n.a.
2b. One workshop
conducted for various 2b. Study tour report
government stakeholders
on fund flow study
findings, including audit
compliance, by April 2019
2017 Baseline: n.a.
2c. One workshop 2c. Training report
conducted for AAAD
officials on the updated
user training manual, with
handouts for functional
use of the new system, by
December 2020
2017 Baseline: n.a.

3. Functional work 3a. Updated user manual 3a. Updated user

flow document of on functional workflow for manual for AAAD
AAAD updated AAAD completed and
released by March 2019
2017 Baseline: 0

4. Study on existing 4a. Report endorsed by 4a. Report on fund

fund flow process AAAD by May 2019 flow process
prepared 2017 Baseline: n.a.
 Appendix 1 7

Key Activities with Milestones

Output 1: IT systems for debt management modernized
1.1 Hire Administrative Coordinators and procure goods (Q1 2018)
1.2 Develop system requirement specifications and the web portal and/or website and application
software; deploy and configure web portal and software application; undertake user acceptance
testing; prepare site (Q4 2019)
1.3 Undertake activities to integrate and commission the system (Q1 2020)
1.4 Undertake handling support after the system is live (Q2–Q3 2020)
Output 2: Capacity building activities for AAAD conducted
2.1 Conduct consultations with AAAD regarding country for study tour (Q3 2018)
2.2 Prepare a questionnaire for study tour (Q3–Q4 2018)
2.3 Conduct a study tour to understand international best practices (Q4 2018)
2.4 Review draft study tour report and hold discussions with AAAD based on an understanding of
international best practices in debt management, claim processing, e-business initiatives, and
electronic submission of claims (Q1 2019)
2.5 Prepare for and hold a dissemination workshop to share experiences on automation of work
processes related to external debt management, and ways to expedite and streamline fund flows,
including audit compliance with framed solutions (if any) (Q2 2019)
Output 3: Functional work flow document of AAAD updated
3.1 Study the existing work flows at AAAD (Q1 2019)
3.2 Discuss and finalize work flows with AAAD (Q1 2019)
3.3 Draft an updated AAAD user manual (Q1 2019)
Output 4: Study on existing fund flow process prepared
4.1 Conduct consultations with relevant government departments involved in the fund flow process (Q1–
Q2 2019)
4.2 Undertake a review through field visits to 3–4 projects (including weaker states), discuss ways to
expedite or streamline fund flows by framing potential solutions, and explore possible IT-oriented
solutions if possible with project authorities (Q1–Q2 2019)
4.3 Discuss findings of field visits with AAAD, and submit a draft report including recommendations (Q2
2019)
Inputs
ADB: $725,000
Note: The government will provide counterpart support in the form of counterpart staff, office supplies,
secretarial assistance, and other in-kind contributionsb

Assumptions for Partner Financing

Not Applicable
AAAD = Aid Accounts and Audit Division, ICS = Integrated computerized System, IT = Information Technology, n.a. =
not available, Q = quarter, TA = technical assistance.
Source: Asian Development Bank
a 2015, Government of India, Ministry of Electronics and Information Technology. 2015. Digital India: Power to

Empower Program.
b Detailed list of counterpart support (Supplementary Document 3, accessible from the list of linked documents in

Appendix.
8 Appendix 2

COST ESTIMATES AND FINANCING PLAN

($’000)

Item Amount
Asian Development Banka
1. Consultants
a. Remuneration and per diem
i. National consultants 635.0
b. Out-of-pocket expenditures 7.0
2. Goodsb 10.0
3. Training, seminars, workshops, forum and conferencesc 31.0
4. Contingencies 42.0

Total 725.0
Note: The technical assistance (TA) is estimated to cost $900,000, of which contributions from the Asian
Development Bank are presented in the table above. The government will provide counterpart support in the form of
counterpart staff, office supplies, secretarial assistance, and other in-kind contributions (a detailed list of counterpart
support is accessible from the list of linked documents in Appendix 3). The value of government contribution is
estimated to account for 19% of the total TA cost.
a Financed by the Asian Development Bank’s Technical Assistance Special Fund (TASF- other sources).
b Include laptop computers, mobile access devices, network devices and other IT hardware. Goods will be turned

over to the executing agency.

c One international study tour

Source: Asian Development Bank estimates.

 Appendix 3 9

LIST OF LINKED DOCUMENTS

http://www.adb.org/Documents/LinkedDocs/?id=45016-001-TAReport

1. Terms of Reference for Consultants

Supplementary Documents

2. The Functions and Roles of the Aid Accounts and Audit Division of the Department of
Economic Affairs
3. Detailed List of Counterpart Support